'Big Four' consultancy special: Feargal O'Rourke of PwC talks Brexit, FDI, employing 2,600, and accommodation
FEARGAL O'ROURKE first came to national prominence when, as a child of Fianna Fail TD Mary O’Rourke, he appeared in a piece in the Irish Independent on the children of politicians.
The article asked the children what they would like to be when they grow up. "Minister for Finance," the young O’Rourke proudly declared back then.
"Thankfully I got rid of that virus that infected many other members of my family, and Paschal is doing a great job," O’Rourke laughs.
Today, O’Rourke is of course not Minister for Finance, but nonetheless, as Managing Partner for PwC Ireland, he plays a key role in Ireland’s financial industry.
Despite his now long career at PwC, he says that initially it was always his intention to return to his native Athlone, something he admits will not happen now.
"I did a B-Comm in UCD and I did what is colloquially known as ‘the milk round’ (interviews with the main consultancy firms), there used to be a big eight at the time and I had a number of offers from some of the firms and I took a risk, there was something about the culture of Price Waterhouse that you got that stood out for me."
"I was very lucky, I had a really good boss, she was brilliant to me, really looked out for me. When I qualified she advised that I would be better off making manager, and when I made manager, she made partner, and I remember she sat me down one day and said ‘I think you have what it takes’ and then one day you wake up and you realise that you are not heading home to the country."
Mr O’Rourke, who came up the ranks of PwC on the taxation side says he loved accounting, but wasn’t particularly mad about auditing.
"My dad left school at 16 and he was very keen on qualifications, he advised me to get the institute of Chartered Accountants, get the qualification."
"Having known what I knew about working in a small firm [from summer holiday jobs] I said I would try tax and it has worked out for me so far."
Today O’Rourke is in the job of Managing Partner for the past two and half years of a four year term, having been made a partner of the company in 1996.
"In your first decade as partner you are still leading teams, working on clients, helping clients settle out their issues. Most of my clients are from the West Coast US and I would still go out there one week a quarter for the last 15-20 years."
Today O’Rourke works on 3-4 clients, where they have asked him to stay on the accounts.
In addition, he does a lot of taxation policy work, liaising with, among others, the Revenue Commissioners, the Department of Finance, and the OECD.
"But the rest of my time is running the firm, and that probably breaks down into a lot of time on people issues and a lot of time out and about with clients."
The company, which employs around 2,600 people, mainly in their Dublin office in the ISFC, has a turnover out about €300m a year in the Republic of Ireland.
"It’s a big business that needs running."
When asked what he sees as the biggest challenges to the industry, he responds by saying that in one sense the company is not different to a lot of businesses out there,
"The things that I would focus on are people and making sure you get the best people."
"We have just come off our summer interim recruitment programme, we had 1,800 people applying for 140 places, all of a very high standard, making sure that every year we get the best people and we recruit about 350 graduates every year."
"So getting talent is our biggest issue."
"The second biggest issue for the industry is technology and disruption, so what is the impact of artificial intelligence, automation, how will that impact our business, can we use it to be more efficient, can we use it to be more effective."
The third challenge that O'Rourke highlights is culture. It doesn’t matter what your strategy is, he says unless you have the culture right.
"One of the learnings for me in this job is when you are the CEO or the Managing Partner, having a discernible culture, spreading that culture, making sure that culture is lived by you and by everybody else is a key way of just driving the organisation, so if you get brilliant people in the door, you present them with a culture and a set of values that they really identify with and they are happy with the work they are doing, and if you can deal with the challenge of automation and artificial intelligence."
"They are the industry specific things that I worry about."
We turn to the macro issues that impact the economy, and O'Rourke admits that he is concerned about the extent to which the country is dependent on the US economy.
"When they [the US] are doing well, we tend to do better than the rest of Europe, when they are doing badly, we tend to do worse than the rest of Europe, so I watch to see how the US economy is doing."
"I watch to see have we learnt the lessons from the last time around. The National Development Plan – delighted to see that coming out last week, but also things like did we learn the lesson of not narrowing the tax base."
"The last time the crash hit we were very dependent on things like Stamp Duty, now we have a property tax, which should be a more regular source of revenue for the exchequer whether times are good or bad, but the income tax base narrowed too much the last time – we would all love lower tax, but we want to have the investment and the infrastructure that we need to have, and we have to recognise that that needs people to pay taxes."
"I think the number one priority for the Government [in terms of tax] is probably the squeezed middle and taking them out of the top rate of tax, so if we learnt the lessons, and specifically then some of the infrastructure spend needs to happen sooner rather than later, in particular having joined up thinking around development if we are going to have 350,000 more people living in the city over the next 20 years, we need to address the issues like high-rise quality residential accommodation in the city and we need to address it now."
"It’s tougher and tougher [to rent in Dublin] and I see that... We need to now be able to say in the next 18 months, gosh there is lots of apartments and housing coming on stream in the city and that is where it is needed."
Foreign Direct Investment
On the subject of Foreign Direct Investment, O’Rourke says that the country has built a fantastic platform, but that it has a heavy dependency on it.
"It’s a very big positive, but it sows the slight seeds of a negative."
"It would be great to see the indigenous companies rise to that, and we have a number of great success stories out there at the moment."
When asked about Brexit, O’Rourke is pragmatic, saying that while his clients are preparing for a hard Brexit, he believes that at some point at the last minute "sanity might prevail" and there will be a soft Brexit, "but I wouldn’t be putting the house on it yet."
We turn to the matter of tax, a subject close to O’Rourke’s professional heart at least, and I ask if he is worried about Ireland and the country’s corporate tax rate?
"No, I think other countries will realise that they are not going to get us off 12.5pc, like the Frances and the Germany’s tried it back when the troika came in and they realised that we weren’t giving it up."!
But he says these countries are trying it a different way now, through things like the CCCTB, which is a European tax consolidation project.
"They are trying digital taxation, and I think that at the end of the day we have to have a tax system that is modern, fit for purpose, seen as fair, but preserving our national strategic interests, so I don’t think that 12.5pc is under threat, but I think there will be different threats under different guises to our tax take."
"We need to be fair, we need to have our modern, transparent system, but we need to say, at the end of the day these are other countries trying to take our tax take and we need to defend that."
Post June 2019
O’Rourke’s term as Managing Partner ends in June 2019 and I ask him if he would be interested in running for a second term. While 2019 may seem like a long way off, O’Rourke’s love for his job is very evident,
"I don’t want this to sound trite but I think I am probably one of the luckiest people at work in Ireland today. I have a fantastic job, I work will brilliant people and brilliant companies. "
"So if the partners are willing to have me for another go, I would be more than delighted to go for a second term, but we will see, there is another bit to go yet, they might have buyers remorse yet!"
"Timing is everything and I was fortunate to take over at the time I did and to take over with huge support of the partners, and we have been reporting record results."